Web game playing 37 why sell a-share auto parts company?

article/ivy

A game company by a-share companies again. However, the company is not a mobile game, but the web game. It is worth noting that the a-share companies acquire the web games, or an auto parts company. Before the acquisition, and the scandal-plagued web games, another a-shares company datang telecom, and datang telecom’s related notice at once.

this is interesting. How is the deal? In addition, from the deal, we can see the trend of the industry how to again?

on October 9, the shenzhen stock exchange listed company shun rong co (002555) announced that in total value of RMB 1.92 billion to buy domestic web game playing 37 60% stake. , among them, 480 million yuan from the cash surplus value from the acquisition of shares of listed companies to pay.

under the first to get to know the two companies. 37 play in domestic web game market, how the river’s lake status?

the data shows, 37 play was established in September 2011, the registered capital of 10 million yuan, the legal person as Li Weiwei, as before the transaction, Li Weiwei with another co-founder has respectively have 37 play an 50% stake in the mountains.

that is to say, 37 play before sale haven’t received any VC investment, and the whole company is Li Weiwei and had open a day of two people. This simple equity structure and acquisition bring convenience for the future.

the data shows, 2012, 37 play revenue of 587 million yuan. And 1 to July, 2013, its total revenue reached 813 million yuan. Corresponding net profit of 69.55 million yuan and 115 million yuan respectively. We can see its growing very fast.

the 37 play platform operating revenue “qin beauty” 37 play 21% of the total revenue, accounted for 16% of the divine comedy, “the fire god of war” (14%), for the former three income products. These three products are come from different developers, contributing to 37 play the income structure of relatively scattered, also explain 37 play no serious future development depends on a developer.

and in the year to July, play accumulative total registered users, 174 million, 37 months paid subscribers 233700, monthly ARPU (average pay per user) value of 431.27 yuan, top-up amount over one hundred million yuan per month.

the above data is a what concept? Lateral comparison. In the introduction of analysys data report, in the first quarter of 2013, 37 market share among domestic web game 5, the market share of 8.2%; Top four tencent, fun swim, 4399 and 360 respectively, the market share of 18.1%, 10.3%, 9.3% and 10.3% respectively.

thus, 37 play’s very close to swim platform of data on page 360, only 0.5%, compared with 3 4399 and only 1.1% of the gap, the gap with second fun swim only 2%. Further, domestic web game market share, tencent accounted for big head, the advantages are more obvious, and the gap between 2 to 5 is very small. That is to say, two to five once a merger, which will impact on the landscape plays. In 2 to 5, the fifth 37 play has become A holding subsidiary of a-share listed companies, 360 was listed companies in the United States, and 4399 A thought independent public, but the A shares have been opened. That is to say, the next to mergers and acquisitions are likely to be the second of fun to swim, the prequel of fun swim rumors of 360 want to buy, can release some of the signal.

simple introduction over 37 plays, so the shun rong co is what position?

the data shows, the formerly known as shun rong shares wuhu shun rong auto parts co., LTD., founded in 1995, listed on the shenzhen stock exchange in March 2011. Listed before the registered capital is 134 million yuan. As a main business for automotive plastic fuel tank development and production of sales of auto parts enterprises, and its main business accounted for more than 99% of the company’s total revenue. Its founding team oh hold shun rong family shares a 56.04% stake.

see from here is that shun rong stake in the business had nothing to do with the game, even with the Internet are not related. But also can see, shun rong co business unit is very single, main business revenue accounts for more than 99% of all revenue, this seems to be in A shares how rare. There is no real estate revenue, financial investment revenue, not a sideline.

in addition note that oh family with a 56.04% stake. You know, if oh family stake is less, so companies after m&a, is likely to control not in themselves. That is to say, a 56.04% stake for the diversification of the company to further create the condition of capital.

but always focus on the auto parts business shun rong why shares “amorous” again?

results show that in 2012, shun rong shares revenue of 309 million yuan, from 2011, a 8.6% drop in annual income of 338 million yuan. And 1 to July, 2013 total revenue of 150 million yuan, annual revenue is likely to be less than last year.

shun rong co also said in a statement, since 2011, the domestic auto industry overall decline, the survival and development face extrusion independent brand cars, company’s main customer purchase quantity and purchase price fell, the main business revenue decline, the original main business into the market, customer adjust optimization phase.

so you can see that the a-share companies focus if you want to do is more difficult. Most of the A shares of the company’s main business for the manufacturing industry, support the real economy of the country, and the development of the manufacturing industry in greater dependence on cash flow, and affected by macroeconomic volatility. Macro economic malaise, bank root and tender, manufacturing hit, most of the A shares of the company’s main business is affected by the larger, and in order to meet the growing requirements to reward our shareholders, can only go into or speculate some concept A hot industry.

the cultural sector has become A shares since last year to one of the engines of growth. Culture plate is hot a few business including content distribution, OTT, network video and games. As you can see, like huayi, light has become a leading cultural sector stocks, what’s on channel TV or movies, share prices will rise. In addition, the culture company assets injection, but also the local government policy support.

mentioned policy support, example. Shun rong’s headquarters in anhui wuhu, 37 play its wholly owned subsidiary of anhui is still fun to play in wuhu. According to the local relevant government policy, anhui is still fun to play 1 year and 2 years from the profit-making year will be exempt from enterprise income tax, enterprise income tax shall be levied in 3 to 5 years in half. And according to data calculation, the 37 play through subsidies and tax breaks for income accounted for 10% of its net profit.

in the cultural sector, the film and television play investment is not near the cash flow game. Data statistics, in the first half of this year, the national movie box office revenue of 11 billion yuan, and the game revenue of 33.9 billion yuan, the growth rate is 36%. This can also see why in the first half of this year the game frequent mergers and acquisitions. Analysys data show that in the first half of this year, a total of 14 games m&a, involving a value of RMB 9.6 billion.

of course, in the first half of 33.9 billion yuan, 23.3 billion yuan from traditional online games, and income from web games and hand swim only 5.34 billion yuan and 2.53 billion yuan respectively. But from the point of growth rate, growth rate of 18% over the same of traditional online games, then the growth rate of 40% and 100% respectively. Therefore, in the first half of the year in 14 m&a, accounts for the vast majority of hand swim mergers of 10.

and predictably, due to the domestic a-share market has not opened, and under the influence of macroeconomic overseas IPO market cautious encounter cold and VC investment, there will be more and more game company will be listed company merger and acquisition.

to look at the details.

in 2012, 37 play revenue of 587 million yuan, shun RongYing charge 309 million yuan. From the point of revenue, shun rong buy 37 plays, is a “small to swallow a big deal.”

“with little swallow a big” acquisition, cannot expect to cash, and most have to rely on equity.

the deal, shun rong shares of listed companies cash only account for 25% of the purchase price, the value of the remaining 75% of the purchase price paid by the listed company’s shares. And a large number of listed companies equity payment may result in buyer “shell”, to make the listed company main body is changed.

it is a “backdoor listings”?

in order to satisfy the transactions in the law does not constitute a “backdoor listings” conditions, after the acquisition of trigger, shun rong co’s largest shareholder oh for family planning in cash 246 million yuan subscribed for 24 million shares in non-public, to make oh family ownership of 30% or more.

according to the relevant regulations on listed companies, domestic investors can actually control more than 30% shares of the voting rights of listed companies, to have control of listed companies. Through acquisitions and subscribe, oh family stake will fall from 56.04% to 56.04%.

but note that, in fact, after the completion of the acquisition, 37 play two co-founder Li Weiwei and had open a day will hold shares listed company shun rong respectively 22.82% and 20.88% of the equity, total holdings amounted to 43.7%. And before the acquisition, Li Weiwei and once all have 37 play a 50% stake in the mountains. That is to say, the management of 37 play were held 43.7% of RongShun shares of listed companies, this value is bigger than the number of shares of 30.86% oh family!

thanks, Li Weiwei and had open a day on a seat on the board made some compromise. After the deal, shun rong stake for nine members of the board of directors, remove the four independent directors, oh family of three seats, the board of directors and Li Weiwei will nominate two seats, had made no mention of seats for the mountains. This also means that, after the acquisition, 37 play does not shun rong shares the majority of the board of directors.

in addition, it is important to note that this transaction also involves the “bet” clause.

37 play in terms of commitment to shun rong shares not less than 2013 yuan at the end of 2013 net profit. If the deal to happen in 2013 years, 37 play will promise in 2014 and 2014, net profit of not less than 300 million yuan and 360 million yuan respectively. If trade in 2014, 37 play will promise in 2014 to 2016, three years of net profit not less than 300 million yuan, 360 million yuan and 430 million yuan respectively.

as of July, 2013, 37 play full-year net income reached 115 million yuan, and this year promises to differ 100 million yuan only.

but once unrealized promise, Li Weiwei and had open a day will compensate in shares first, skimpy share by cash compensation.

it is important to note that in May this year, datang telecom has hair announced plans to buy 37 plays, but later send announcement to give up, this year in late June for guangzhou to play.

datang telecom takeover guangzhou to play, in the Case of purchase price is 1.7 billion yuan, a 100% stake in acquisition, among them, 35% of the price for cash payment, 65% of the price for shares to pay.

datang telecom acquisitions to play Case to 37 also play made reference to the sale of pricing. Datang telecom valued at 1.7 billion yuan, of play as a whole to play 2012 in annual revenue of 260 million yuan, net profit of 27 million yuan, and 37 to play in the same period on revenue of 587 million yuan, is 2.26 times to play; Year net profit of 69.55 million yuan, is 2.58 times to play. If to play value is 1.7 billion yuan, according to the same standard, 37 play of valuation should be at least 4.4 billion yuan. Give 37 play and suitable valuation is $3.2 billion. But considering to play by releasing mobile application platform PP assistant on the mobile end play than 37 advanced layout, and shun rong is 60% of the share purchase, play certain independent space to 37, 3.2 billion yuan of the overall price is still in the reference range.

don’t choose datang telecom, and select suitable rong, for 37 plays, perhaps there is a whole sale, or cede control of thinking. After the deal, shun rong have 37 play 60% of the control, but also to 37 to play two co-founder holding space, soak in the holding space also gives both sides more room for the future.

room?

for 37 plays, in addition to the “who” has a listed company, to broaden the financing channels, the future can also through the introduction of a third party independent public investors. 37 play of shareholder structure is very clean, and also the investment operation of the future. In addition, the above mentioned, at present, the domestic market share of web game 2 to 5 disparity is not obvious, to obtain A public offering of the financing channels for “sustaining the war by means of”, after all, A shares has not been opened, and the U.S. capital markets only for game companies around six to eight times earnings, and once guarantee market share, to be mature capital market opportunities, still have the possibility of independent public.

for shun rong, to win a valuation of more than 30, is much bigger than their dimension of the company will not be easy. Also because of this, by holding first, integration of the business team, to gauge whether to increase again, or triggered by “bet” condition to gain more shares, from price and strategy, are more cost-effective.

for shun rong, 37, after all, play several need to prove. One is, to move the step, competition in guangzhou to play already through PP assistant power on the mobile end; Second, the future of the web game pattern is bad, the current trend is more and more close to the big platform; Three is that, unlike do auto parts, the core asset is a team game industry, after the takeover, whether the team can effectively break-in, high-level personnel.

finally compare had recently listed in Hong Kong. Traveling is worth hk $8.2 billion, equivalent to 6.5 billion yuan. But different from 37 to play, had its business mainly for game development, and 37 play more is acting operation, therefore, 37 net profit margin is much lower than traveling. In 2012, had revenue of 777 million yuan, is 37 play 1.3 times; Net profit of 240 million yuan, is 3.4 times of 37 play. If in the same p/e ratio calculation, 37 play the market value of 1.9 billion yuan, so it seems, is still A high stock valuations.

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